Affected by the weakening of the US dollar index in the Asian and European sessions, spot gold continued to rise, reaching a high of 2664.20, and then fell back due to the impact of stronger-than-expected US economic data. As of now, the gold price is 2649.21.
US Economic Data
The US JOLTs job vacancy data for November recorded 8.098 million, exceeding market expectations, and the previous value was revised upward.
The December ISM non-manufacturing PMI was 54.1, exceeding market expectations.
After the data was released, traders no longer fully digested the bet that the Fed would cut interest rates before July.
Trump: UAE investors will invest $20 billion to build data centers in the United States; Biden's offshore drilling ban will be overturned on the first day of his inauguration; inflation is rampant and interest rates are too high; military or economic coercion is not ruled out to control the Panama Canal and Greenland, to rename the Gulf of Mexico as the Gulf of the United States, and to use economic power to merge Canada; NATO countries' military spending will increase from 2% of GDP to 5%.
Canadian Prime Minister Trudeau: Canada cannot become a state of the United States; Danish Prime Minister: Greenland is not for sale; Panamanian President: Will not comment on Trump's remarks on the Panama Canal before Trump takes office.
B?rge Brende, President and CEO of the World Economic Forum, said that the Global Cooperation Barometer released this week comes at a critical moment of global instability and a time for governments to set an agenda for the future. The report pointed out that the decline in global cooperation occurred at a time when cooperation was most urgently needed, warning that global cooperation has "stagnated." As the relatively stable cooperative order in the post-Cold War era gradually shifts to a more fragmented situation, more cooperation is needed to solve urgent challenges such as climate action and technological governance. This prospect will strengthen the attributes of gold as a safe-haven asset.
Craig Shapiro, macro strategist at TheBearTrapsReport, believes that the world is transitioning to a new global order that may be more mercantilist and multilateral, centered on gold as a neutral reserve settlement asset. As the world pattern evolves towards multipolarity, gold prices may continue to rise in 2025.
Chantelle Schieven, head of research at Capitalight Research, predicts that gold could break through $3,000 an ounce in the second half of 2025 due to rising global geopolitical uncertainty. The market is still evaluating Trump's policy proposals and sees them as transactional, as a bargaining chip in broader negotiations. Now, we are in a "wait-and-see" phase, trying to determine the likelihood and impact of these proposals. The big variable at the moment is how actively Trump will promote these policies.
Ryan McIntyre, managing partner of Sprott Inc., also expressed optimism about gold, believing that global geopolitical uncertainty makes gold more attractive than overvalued stock markets. Against the backdrop of record global debt levels, gold remains the most attractive asset in a multipolar trending world. Long-term geopolitical uncertainty will continue to support the importance of gold as a safe-haven asset, beyond any short-term price fluctuations.
Gold achieved its largest annual gain in more than a decade in 2024, reaching 27.6%, even outperforming the S&P 500. But in December, gold's gains weakened, especially after the Fed's hawkish turn at its December meeting. Since the latest dot plot shows a reduction in the number of rate cuts, it means that the opportunity cost of holding gold, an interest-free asset, will not fall as quickly as previously expected. In addition, the maintenance of high US interest rates may drive a stronger dollar, which will also threaten gold's gains because it increases the cost of buying gold for non-US dollar investors.
Nevertheless, we still believe that gold will rise further in 2025 based on the gains in 2024. Although the US federal funds rate will not fall as much as previously expected, the overall downward trend has not changed. Moreover, the expectation of a Fed rate cut is not the only reason to hold gold. We believe that central banks will continue to push for de-dollarization and diversification of reserves, which means they will continue to increase their gold holdings. Based on this, we expect central banks to increase their gold holdings by more than 900 tons in 2025. In addition, the continued increase in the US federal government's fiscal deficit and the rising long-term debt level will also enhance the attractiveness of gold relative to the US dollar.
In summary, we believe that gold will indeed continue to rise, but the latest guidance from the Federal Reserve has prompted us to lower our price target for gold to $2,850 by the end of 2025.
After a promising gap at the beginning of the new year, gold is trapped between the 20-day and 50-day moving averages, that is, in the 2637-2660 area. Although non-farm payrolls will increase volatility this week, from a technical perspective, there are currently no encouraging signs for gold. The daily RSI is still struggling to enter the bullish zone above the neutral 50 level, reflecting a lack of confidence among bulls, while the Stochastic Oscillator is about to reverse downwards, indicating that momentum may be declining.
We believe that a close above the 50-day moving average at 2,653 may trigger some buying interest, but this alone may not be enough for a sustained rise. To truly turn the market sentiment around, the price must successfully break through the 2,670-2,680 resistance zone, where the 23.6% retracement of the June-October rally is located. In this case, the price may quickly rise to the key 2,720 resistance. If the hurdle near 2,750 is also cleared, gold may target the 2,789-2,815 area. A break above it will continue to rise towards 2,870-2,900.
On the downside, the first support may be seen near 2,600, which coincides with the lower boundary of the symmetrical triangle and the 38.2% retracement level. Moving lower, the price may attempt to reverse at the upward trend line near 2,570. But if it fails to gain a foothold here, the focus will fall on the 50% retracement and the November low of 2540, breaking below which will turn the short-term outlook bearish, leading to a sharp drop in prices to the 200-day SMA and the 2500 round number.
Overall, gold is currently in a neutral range of 2600-2680, and the next big move may depend on whether gold breaks the balance of this range.
The recent slowdown in gold volatility is obvious, but this does not necessarily mean that bulls have completed the symmetrical triangle pattern. This pattern is usually an example of consolidation after a strong bullish move, as the combination of previous bullish profit-taking and late bullish pressure from bulls trying to buy at support on pullbacks can lead to narrowing price action, such as what we have seen since the turning point in late October and mid-November. However, I am more neutral on this pattern, as long-term consolidation does not always carry a previous bias.
In the short term, the 2721 level was an important focus for gold last year, helping gold to hit swing highs in late November and December. The second test resulted in a higher high and a test below $2600, further confirming the support of the triangle pattern. The rebound from the $2600 support resulted in a short-term high, and the pullback from this level looks promising to maintain the strength of the previous resistance around $2633-2639, which can be interpreted as a short-term bullish bias, but it is important to explain that this is all happening in the long-term consolidation of the symmetrical triangle.
On the 4-hour level, we can see that gold opened this week with an active trend and a long cross star pattern. Breaking through the high and low of this pattern can determine the short-term direction, and the current trendline support is around $2604, after which the $2600 level will come into view. Breaking through $2650 will open the door to a retest of $2657, followed by last week's high of $2664, followed by the Fibonacci level of $2674.